UPDATE 2-People's United to buy Financial Federal for $738 mln
* Deal values Financial Federal at $27.74/shr * Deal to add to People's United's oper profit in 2010
* Financial Federal soars 37 pct, People's United up 4 pct (Adds details, background; updates stock activity)
By Anurag Kotoky and Sweta Singh
BANGALORE, Nov 23 (Reuters) - People's United Financial Inc (PBCT.O: Cotización) agreed to buy Financial Federal Corp (FIF.N: Cotización) for about $738 million in stock and cash to boost its equipment financing businesses.
The deal values Financial Federal at $27.74 a share, a premium of 35 percent to the stock's Friday close of $20.55.
Financial Federal shares jumped as much as 36 percent Tuesday. People's United shares, which rose as much as 4 percent, later pared their gains to trade down 5 percent.
"I think its overall positive. It adds to their earnings power and balance sheet capacity for doing additional deals," analyst Christopher Nolan of Maxim Group said.
People's United, one of the better-capitalized banks in the United States, said it expects the deal to add significantly to its operating profit in 2010 and be slightly positive to its capital levels on a pro forma basis.
"Financial Federal is a leader in equipment financing and provides a valuable complement to our existing business lines, particularly, People's Capital and Leasing, our equipment financing subsidiary," People's United Chief Executive Philip Sherringham said in a statement. Continuación...